How to Connect Your Bank Account to Your Accounting Software

Why Bank Connection Is One of the Best Things You Can Do for Your Bookkeeping

Before bank feeds existed, bookkeeping meant manually entering every bank transaction into your accounting system - copying dates, descriptions, and amounts from your bank statement, line by line, every month. Bank connection - also called a bank feed or open banking integration - eliminates this entirely. Your accounting software pulls transactions directly from your bank account, typically within a day of them occurring. You then categorise each transaction (or let the software auto-categorise based on rules you set), and your accounts stay current with minimal effort. For most small businesses, this single feature reduces bookkeeping time by hours every month.

How Bank Feeds Work

Modern bank feeds use open banking APIs (Application Programming Interfaces) to securely transfer your transaction data from your bank to your accounting software. You authorise the connection once - typically by logging into your banking app and granting permission - and from then on, transactions flow automatically. The connection is read-only: your accounting software can see your transactions but cannot initiate payments or modify your account in any way. Open banking is regulated in the UK under the Open Banking Standard, which means the connection is secure and governed by FCA rules.

Older bank feed connections used a technology called screen scraping - the software would log into your online banking as if it were you and copy the data. This approach is less secure, less reliable, and increasingly being replaced by proper API connections as open banking rolls out. If your accounting software offers both methods, choose the API-based connection.

Step-by-Step: Connecting Your Bank in Note.now

1. Go to Banking in your Note.now dashboard and click "Connect Bank Account"
2. Search for your bank from the list of supported institutions
3. Click through to your bank's authorisation page - you'll be prompted to log in to your banking app or online banking to grant permission
4. Confirm the connection and choose which accounts to connect (current account, savings account, credit card)
5. Select the start date for transaction import - typically the beginning of your current financial year or accounting period
6. Note.now will import your transactions. For a new account, this may take a few minutes for historical data.

Setting Up Transaction Rules

Once your bank is connected, take 20 minutes to set up transaction categorisation rules. These tell Note.now that transactions from a specific payee should always be categorised as a specific expense type: payments to "Adobe" always categorised as "Software subscriptions," payments to "Shell" always categorised as "Fuel," payments from "ACME Corp" always categorised as "Sales income." Once rules are set, most routine transactions categorise themselves. You only need to manually categorise unusual or one-off transactions.

Related reading: understanding bank feeds in cloud accounting.

Bank Connection vs. Manual Import

If your bank doesn't support direct API connection, most accounting software supports manual import via CSV or OFX files. You download a transaction export from your bank's website and upload it to your accounting software. This is less convenient than an automatic feed but still much faster than manual data entry. The categorisation rules you set apply equally to manually imported transactions. Aim to do a manual import at least monthly - leaving it longer means a larger catch-up exercise each time.

Security Considerations

Bank connection via open banking is secure, but a few precautions are worth taking: only connect your bank account within reputable, established accounting software; review the permissions you're granting (read-only is all that's needed - anything requesting payment initiation permission warrants caution); and periodically review connected apps in your banking app's settings to remove any connections you no longer use. Never share your banking credentials with a third party directly - legitimate open banking connections route through your bank's own authorisation flow.

How Note.now Makes This Easy

Note.now supports open banking connections for all major UK banks and many international ones. Transactions import automatically and are matched to invoices and receipts where possible. Your reconciliation queue shows only the transactions that need attention. See also: bank reconciliation explained. Explore Note.now's banking features, or start free.